Question 1

Which of the following statements is true regarding a trial balance that balances?

Accepted Answer

A) All transactions have been properly recorded. 
B) There are no missing transactions. 
C) This equality can only be achieved after closing entries have been recorded and posted to the ledger accounts. 
D) The equality of debits and credits has been proven. 
A) All transactions have been properly recorded. 
B) There are no missing transactions. 
C) This equality can only be achieved after closing entries have been recorded and posted to the ledger accounts. 
D) The equality of debits and credits has been proven.

Question 2

-Which of the following is a true statement? (Note: A statement may be true even if it does not identify all accounts that have debit balances on that particular financial statement).

Accepted Answer

A) Account numbers 1,3,and 5 normally have debit balances. 
B) Account numbers 2,4,and 5 normally have debit balances. 
C) Account numbers 2,5,and 8 normally have debit balances. 
D) Account numbers 4,5,and 6 normally have debit balances. 
A) Account numbers 1,3,and 5 normally have debit balances. 
B) Account numbers 2,4,and 5 normally have debit balances. 
C) Account numbers 2,5,and 8 normally have debit balances. 
D) Account numbers 4,5,and 6 normally have debit balances.

Question 3

Posting is the process of determining the balance in an account by subtracting debits and credits.

Accepted Answer

A) True 
 B)False

Question 4

What is the term used to describe the left side of a T-account?

Accepted Answer

A) Equity Side 
B) Debit Side 
C) Credit Side 
D) Claims Side 
A) Equity Side 
B) Debit Side 
C) Credit Side 
D) Claims Side

Question 5

Which of the following statements is true?

Accepted Answer

A) Adjusting entries are recorded after the closing entries have been recorded. 
B) Equal totals in a trial balance guarantees that no errors were made in the recording process. 
C) Debits are equal to credits only after closing entries have been recorded. 
D) The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. 
A) Adjusting entries are recorded after the closing entries have been recorded. 
B) Equal totals in a trial balance guarantees that no errors were made in the recording process. 
C) Debits are equal to credits only after closing entries have been recorded. 
D) The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger.

Question 6

Which of the following accounts is increased with a credit?

Accepted Answer

A) Accounts Receivable 
B) Prepaid Rent 
C) Common Stock 
D) Dividends 
A) Accounts Receivable 
B) Prepaid Rent 
C) Common Stock 
D) Dividends

Question 7

Which of the following statements about the entry to record depreciation is true?

Accepted Answer

A) The entry involves a credit to a liability. 
B) The entry involves a credit to Depreciation Expense. 
C) The entry involves a credit to the asset being depreciated. 
D) The entry involves a credit to a contra-asset account. 
A) The entry involves a credit to a liability. 
B) The entry involves a credit to Depreciation Expense. 
C) The entry involves a credit to the asset being depreciated. 
D) The entry involves a credit to a contra-asset account.

Question 8

A company's adjusted trial balance provides the information needed to prepare the balance sheet and income statement.

Accepted Answer

A) True 
 B)False

Question 9

The general journal is a list of a business's accounts and their account numbers.

Accepted Answer

A) True 
 B)False

Question 10

The following account balances were taken from the adjusted trial balance of Kendall Company:
 
What is the Retained Earnings account balance that will be included on the post-closing trial balance?

Accepted Answer

A) $19,900 
B) $7,400 
C) $2,900 
D) $24,400 
A) $19,900 
B) $7,400 
C) $2,900 
D) $24,400

Question 11

Manhattan Company recorded an adjusting entry to accrue interest owed of $300 as of December 31,Year 1.When the related note was paid during Year 2,the company paid $450 in interest.Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry. )

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

A high debt-to-asset ratio may indicate that a company has a high level of debt risk.

Accepted Answer

A) True 
 B)False

Question 13

The closing entry for the Dividends account would involve which of the following?

Accepted Answer

A) A credit to Retained Earnings 
B) A credit to Dividends 
C) A credit to Common Stock 
D) A credit to Cash 
A) A credit to Retained Earnings 
B) A credit to Dividends 
C) A credit to Common Stock 
D) A credit to Cash

Question 14

The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return-on-assets ratio.

Accepted Answer

A) True 
 B)False

Question 15

To record an asset source transaction,an asset account would be debited and a liability or stockholders' equity credited.

Accepted Answer

A) True 
 B)False

Question 16

During a company's first year of operations,the asset account,Office Supplies,was debited for $2,300 for the purchases of supplies.At year-end,a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use.How will the related adjusting entry affect the company's financial statements?

Accepted Answer

A) Expenses will increase and assets will decrease by $1,475. 
B) Assets and expenses will both increase by $825. 
C) Expenses and assets will both increase by $1,475. 
D) The related adjusting entry has no effect on net income or the accounting equation. 
A) Expenses will increase and assets will decrease by $1,475. 
B) Assets and expenses will both increase by $825. 
C) Expenses and assets will both increase by $1,475. 
D) The related adjusting entry has no effect on net income or the accounting equation.

Question 17

Which of the following accounts is decreased with a credit?

Accepted Answer

A) Unearned Revenue 
B) Prepaid Insurance 
C) Accounts Payable 
D) Service Revenue 
A) Unearned Revenue 
B) Prepaid Insurance 
C) Accounts Payable 
D) Service Revenue

Question 18

Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period.How would the related adjusting entry be recorded in the company's T-accounts?

Accepted Answer

A)   
  
B)   
  
C)   
  
D)   
  
A)   
  
B)   
  
C)   
  
D)

Question 19

Chestnut,Inc.reported the following balances on its balance sheet at December 31,Year 1:
 
On January 1,Year 2,Chestnut purchased equipment for $40,000 on account.What is the company's debt-to-assets ratio immediately after the purchase of the equipment?

Accepted Answer

A) 0.42 
B) 0.46 
C) 0.37 
D) 0.34 
A) 0.42 
B) 0.46 
C) 0.37 
D) 0.34

Question 20

Which one of the following would not be included in a closing entry?

Accepted Answer

A) A credit to Rent Expense 
B) A debit to Unearned Revenue 
C) A debit to Service Revenue 
D) A credit to Dividends 
A) A credit to Rent Expense 
B) A debit to Unearned Revenue 
C) A debit to Service Revenue 
D) A credit to Dividends

Which of the following statements is true regarding a trial balance that balances?

-Which of the following is a true statement? (Note: A statement may be true even if it does not identify all accounts that have debit balances on that particular financial statement).

Posting is the process of determining the balance in an account by subtracting debits and credits.

What is the term used to describe the left side of a T-account?

Which of the following statements is true?

Which of the following accounts is increased with a credit?

Which of the following statements about the entry to record depreciation is true?

A company's adjusted trial balance provides the information needed to prepare the balance sheet and income statement.

The general journal is a list of a business's accounts and their account numbers.

The following account balances were taken from the adjusted trial balance of Kendall Company: What is the Retained Earnings account balance that will be included on the post-closing trial balance?

A high debt-to-asset ratio may indicate that a company has a high level of debt risk.

The closing entry for the Dividends account would involve which of the following?

The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return-on-assets ratio.

To record an asset source transaction,an asset account would be debited and a liability or stockholders' equity credited.

Which of the following accounts is decreased with a credit?

Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period.How would the related adjusting entry be recorded in the company's T-accounts?

Chestnut,Inc.reported the following balances on its balance sheet at December 31,Year 1: On January 1,Year 2,Chestnut purchased equipment for $40,000 on account.What is the company's debt-to-assets ratio immediately after the purchase of the equipment?

Which one of the following would not be included in a closing entry?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships,partnerships,and Corporations

Statement of Cash Flows

Financial Statement Analysis

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Exam 3: The Double-Entry Accounting System

Which of the following statements is true regarding a trial balance that balances?

-Which of the following is a true statement? (Note: A statement may be true even if it does not identify all accounts that have debit balances on that particular financial statement).

Posting is the process of determining the balance in an account by subtracting debits and credits.

What is the term used to describe the left side of a T-account?

Which of the following statements is true?

Which of the following accounts is increased with a credit?

Which of the following statements about the entry to record depreciation is true?

A company's adjusted trial balance provides the information needed to prepare the balance sheet and income statement.

The general journal is a list of a business's accounts and their account numbers.

The following account balances were taken from the adjusted trial balance of Kendall Company: What is the Retained Earnings account balance that will be included on the post-closing trial balance?

A high debt-to-asset ratio may indicate that a company has a high level of debt risk.

The closing entry for the Dividends account would involve which of the following?

The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return-on-assets ratio.

To record an asset source transaction,an asset account would be debited and a liability or stockholders' equity credited.

Which of the following accounts is decreased with a credit?

Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period.How would the related adjusting entry be recorded in the company's T-accounts?

Chestnut,Inc.reported the following balances on its balance sheet at December 31,Year 1: On January 1,Year 2,Chestnut purchased equipment for $40,000 on account.What is the company's debt-to-assets ratio immediately after the purchase of the equipment?

Which one of the following would not be included in a closing entry?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships,partnerships,and Corporations

Statement of Cash Flows

Financial Statement Analysis

Filters